October 31, 2011
DIANE JOHANTGEN, PETITIONER-RESPONDENT,
BRANDYWINE SENIOR CARE CENTER, RESPONDENT-APPELLANT.
On appeal from the New Jersey Department of Labor and Workforce Development, Division of Workers' Compensation, Claim Petition No. 2004-4391.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Telephonically argued February 3, 2011
Before Judges Fuentes, Gilroy and Ashrafi.
Respondent Brandywine Senior Care Center owns and operates a long-term care nursing home. Once per week petitioner Diane Johantgen provided hairstyling and other personal grooming services to the residents of the nursing home. In December 2003, petitioner fell from a chair while hanging Christmas decorations in the salon area where she worked.
Petitioner filed a claim for workers' compensation benefits. Respondent contested the claim on the ground that petitioner was an independent contractor, not an employee. The judge of compensation ruled in favor of petitioner finding that she was an employee of respondent who suffered a compensable injury in a work-related accident. Respondent appeals, arguing the judge of compensation erred as a matter of law in finding petitioner eligible for compensation. We affirm.
The relevant facts are not disputed. Petitioner fell from a chair and fractured her wrist while hanging Christmas decorations in the area of the nursing home designated by respondent for petitioner to provide hairstyling services to the residents. Petitioner had worked as a licensed hairdresser at this nursing home since 1992. She reported once a week starting at about 9:30 in the morning and continuing throughout the day until completing all of the scheduled residents.
The services petitioner provided to the residents of Brandywine included haircuts, hair styling, pedicures, and manicures. She did this in a room next to the nurse's station, off the wing where the patients' rooms are located. The nursing home called it the beauty salon. According to petitioner, the room had a small sign outside with Braille, "[l]ike [the ones] you find on the room numbers," to identify its function. Otherwise, the "salon" was the type of room "[one] would definitely think  was part of the facility." Petitioner's name appeared only on the inside of the room, next to the frame displaying petitioner's hairdresser license.
In addition to the space for the beauty salon, respondent provided the chairs, hairdryers, a sink, and a cabinet for supplies. Petitioner furnished some of her own supplies, including "permanent waves, hair dye, [and] things for sanitation," because these supplies are only sold to licensed hairdressers. She provided her own scissors, because they are "personal" and "[e]ach hairdresser or barber has their own"; she took the scissors home after completing her shift. Petitioner used medicated shampoos provided by the nursing staff when required; otherwise, she used the shampoo she purchased from cosmetology suppliers. She "understood" this cost was "part of the percentage that [she] received for doing things."
Petitioner was the only hairdresser in the salon on the days she worked. However, residents' family members were permitted to work in the salon too. Residents scheduled their appointments with petitioner directly through the nursing home. The facility transported the residents to petitioner in the salon. When necessary, she also served residents in their rooms.
The facility set the fee schedule for petitioner's services. At the end of the day, petitioner would submit a list of the residents she had served to the billing office. The list included the name of the residents, the service performed, and the price for that service, as set by the facility. Petitioner would then prepare a billing statement, from which respondent would deduct 15% of the receipts, and pay petitioner the 85% balance.
Petitioner had a similar arrangement at Liberty Royal Care Center. She reported once per week, was provided a room to do the work, and was paid 100% of the fees paid by the residents for her services. In addition to the fee arrangement, another difference between Liberty and respondent was the way in which the residents accessed petitioner's services. At Liberty, the residents did not make appointments; petitioner attended "[w]hoever showed up the day that [she] was there, that's who got it done and then [she] would go." The only other work petitioner did was washing hair on Saturdays at a friend's salon. She started doing this towards the end of her twelve-year association with respondent.
According to petitioner, respondent "always treated [her] as an employee." Respondent required petitioner to receive all of the immunizations required of other employees, including tuberculosis testing every two years, and a hepatitis B shot; she had to provide respondent with proof that she had seen a physician for a physical. And she was never asked to submit a certificate "of workmen's compensation" insurance coverage. She was only required to have personal liability insurance, "as nurses have to provide." The only indication of her non-employee status was in the manner respondent reported her income to the Internal Revenue Service. Each year, petitioner received a 1099*fn1 from respondent. Petitioner's 1099 for the year of the accident stated non-employee compensation of $7,795.07.
At the time of the accident, petitioner was not performing an actual hairdressing function. She was standing on a chair hanging Christmas decorations in the salon. The decorations were given to her by respondent's activities department to make the work environment "more festive for the holidays."
Ray Medina, respondent's administrator at the time, also testified before the court of compensation. He was responsible for "oversee[ing] everything in the nursing home from nuts to bolts." He described petitioner as a "consultant/vendor . . . [who] provided hair care to the residents" for many years. Medina noted that petitioner "had her own company and she provided a service to the facility."
According to Medina, vendors "don't work for the care center. They provide a service." These vendors include those who "provide snacks, sodas," landscaping, and even some medical services. Medina considered employees the "[s]taff that are on [the] payroll, nurses, aides, housekeeping services," and administration. Respondent also employed part-time employees who are required to work at least twenty-four hours per week. Medina also noted that respondent does not maintain insurance for its vendors. They are required to "have their own liability insurance." On cross-examination, Medina conceded that vendors, such as the gardener and the soda vendor, were not required to get immunizations. Despite this inconsistency, Medina considered a vendor "a person who is not on the payroll."*fn2
With respect to petitioner's method of compensation, Medina testified that respondent withholds fifteen percent of petitioner's receipts "for using the facility or whatever stipulation is in the contract." Although not all vendors have this arrangement, Medina noted that the soda and snack vendors are compensated in the same 85%-15% fashion. He characterized the 15% deduction as a fee for the use of respondent's space. Respondent also uses 1099 forms for all vendors.
On the question of control over petitioner's activities, Medina testified that her hair care was autonomous to how she did the hair. [sic] The only information that I am aware we provided was who wanted the hair care done and whether it was a simple haircut or a permanent, whatever the case may be, that the resident wanted or the family wanted. We provided that information to her and how she did that it was autonomous to her performance. [sic]
Respondent set petitioner's hours "based on resident need." Petitioner was directed to report to the salon. She did not have a choice as to the location of the salon.
Petitioner terminated her relationship with respondent after the accident. According to Medina, respondent gave petitioner "a [thirty]-day notice indicating that [it] would no longer need her services." This permitted respondent to bring in another "vendor to provide beauty care for the facility."
Against this record, the judge of compensation found petitioner was an employee of respondent at the time of the accident, entitling her to workers' compensation benefits. The judge's finding was supported by substantial credible evidence.
N.J.S.A. 34:15-36 defines "employee" as synonymous with servant, and includes all natural persons, including officers of corporations, who perform service for an employer for financial consideration, exclusive of . . . casual employments, which shall be defined, if in connection with the employer's business, as employment the occasion for which arises by chance or is purely accidental; or if not in connection with any business of the employer, as employment not regular, periodic or recurring[.]
"[a]n independent contractor is one who, carrying on an independent business, contracts to do a piece of work according to his own methods, and without being subject to the control of his employer as to the means by which the result is to be accomplished, but only as to the result of the work."
[Sloan v. Luyando, 305 N.J. Super. 140, 148 (App. Div. 1997) (quoting Cappadonna v. Passaic Motors, Inc., 136 N.J.L. 299, 300 (Sup. Ct. 1947), aff'd, 137 N.J.L. 661 (E. & A. 1948)).]
The definition of employee in N.J.S.A. 34:15-36 "'is a broad definition which includes relationships not ordinarily considered to constitute employment.'" Conley v. Oliver & Co., 317 N.J. Super. 250, 254 (App. Div. 1998) (quoting Hannigan v. Goldfarb, 53 N.J. Super. 190, 195 (App. Div. 1958)). The statute should be "'construed to bring as many cases as possible within its coverage.'" Conley, supra, 317 N.J. Super. at 254 (quoting Hannigan, supra, 53 N.J. Super. at 195).
"To help determine if an individual is an 'employee' within the meaning of N.J.S.A. 34:15-36 or an independent contractor, the courts developed two tests: (1) the 'control test' and (2) the 'relative nature of the work test.'" Pollack v. Pino's Formal Wear & Tailoring, 253 N.J. Super. 397, 407 (App. Div.), certif. denied, 130 N.J. 6 (1992). Both tests are "designed to draw a distinction between those occupations which are properly characterized as separate enterprises and those which are in fact an integral part of the employer's regular business." Ibid.
Ordinarily, we should first look to the control test. Sloan, supra, 305 N.J. Super. at 148. However, "the control factor, though still pertinent to some extent, is minimized when certain fact patterns appear," so a "more realistic" test in certain circumstances is the "relative nature of the work test." Brower v. Rossmy, 63 N.J. Super. 395, 404 (App. Div. 1960), certif. denied, 34 N.J. 65 (1961). Therefore, "[i]n recent years '[t]he courts have placed greater reliance upon the relative nature of the work test' than upon the control test." Conley, supra, 317 N.J. Super. at 254 (second alteration in original) (quoting Pollack, supra, 253 N.J. Super. at 407).
The Control Test
The control test "considers whether the employer had 'control' over the worker, or in other words, whether the employer had 'the right to direct the manner in which the business or work shall be done, as well as the results to be accomplished.'" Sloan, supra, 305 N.J. Super. at 148 (quoting Kertesz v. Korsh, 296 N.J. Super. 146, 153 (App. Div. 1996)). "The control test is satisfied so long as the employer has the right of control, even though the employer may not exercise actual control over the worker." Ibid.
"The 'right to control' test may be satisfied even though the employer does not control the details of an employee's performance of his or her work." Conley, supra, 317 N.J. Super. at 255. The control test focuses on four factors: "(1) the degree of control exercised by the employer over the means of completing the work; (2) the source of the worker's compensation; (3) the source of the worker's equipment and resources; and (4) the employer's termination rights." Lowe v. Zarghami, 158 N.J. 606, 616 (1999).
In Brower, the petitioner served as a "facial operator" in the respondent's salon in a house owned and renovated by the respondent. Supra, 63 N.J. Super. at 398-99. The respondent dedicated a room in his establishment to the petitioner. Id. at 399. The petitioner had a "chair used for the facials, a dressing table, another chair to sit on, and a vibrator," all of which she furnished, and she "pa[id] for the towels or linen service used in giving the facials." Ibid.
Once the petitioner moved into the respondent's premises, the sign outside was amended from "Michael of Vienna, International Hair Stylist" to include "Facial Treatments," but did not include petitioner's name. Id. at 400. The petitioner did not have a key to the respondent's premises, and the respondent made and scheduled all of her appointments. Ibid. The petitioner never collected the charges for her facial treatments; instead the respondent calculated the week's total receipts and allocated 75% to the petitioner. See Id. at 401. There were no withholdings deducted from the money paid to the petitioner. See id. at 403. The respondent had no knowledge of facial treatments, so he "exercised no control over [the petitioner] in the actual giving of facial treatments." Id. at 401. The petitioner never exercised any discretion to refuse the appointments the respondent scheduled. Ibid.
Under these circumstances, the court stated that the relative nature of the work test is a more appropriate test to determine whether the petitioner and the respondent had an employer-employee relationship. Id. at 404. However, there is nevertheless indicia of respondent's control over petitioner in this case. As in Brower, the nature of petitioner's work as a beautician would not be subject to scrutinizing supervision given that there was no evidence that respondent had any expertise in haircutting. Here, respondent controlled petitioner's hours and appointments. Respondent dictated the room that petitioner reported to when she arrived on the premises.
Applying the four factors set out in Lowe, (1) respondent controlled
petitioner's hours and scheduled petitioner's appointments; the nature
of petitioner's work, however, was not subject to specific supervision
as to the completion of each haircut; (2) petitioner was paid by
respondent; (3) both
petitioner and respondent supplied equipment and resources;*fn3
(4) there was testimony that respondent maintained the right to
terminate petitioner. Lowe, supra, 158 N.J. at 616.
The Relative Nature Of The Work Test
Under the relative nature of the work test a petitioner must show a "'substantial economic dependence'" on the employer. Sloan, supra, 305 N.J. Super. at 148 (quoting Caicco v. Toto Bros, Inc., 62 N.J. 305, 310 (1973)). This is demonstrated when there is a "functional integration" of the parties respective operations. Ibid. (quoting Caicco, supra, 62 N.J. at 310). We must look to the totality of the facts surrounding the relationship to determine the status of petitioner as an employee. See Brower, supra, 63 N.J. Super. at 407. Factors in this approach include: the character of the claimant's work or business -- how skilled it is, how much of a separate calling or enterprise it is, to what extent it may be expected to carry its own accident burden, -- and its relation to the employer's business, that is, how much it is a regular part of the employer's regular work, whether it is continuous or intermittent, and whether the duration is sufficient to amount to the hiring of continuing services as distinguished from contracting for the completion of a particular job. [Buchner v. Bergen Evening Record, 81 N.J. Super. 121, 131 (App. Div. 1963).]
In Brower, we found that the relationship between the petitioner and the respondent constituted an employer-employee relationship by application of the relative nature of the work test. After an extensive recitation of the salient facts, we noted that "[t]he work place of [the] petitioner in [the] respondent's establishment, the work of [the] petitioner being that customarily provided in such a salon, the weekly payments to [the] petitioner, the continuing relationship for an indefinite duration, and the right of each to terminate the arrangement at will" were all factors that supported employee status. Brower, supra, 63 N.J. Super. at 405. The fact that the petitioner was paid without deductions and supplied some of her own equipment was not dispositive of whether she should be considered an employee under N.J.S.A. 34:15-36. See id. at 405-07. The petitioner established her economic dependence on the respondent because she depended on the respondent for all customer contacts, and her activities were in large measure an integral part of the respondent's business. Id. at 407. As we explained in Brower:
[the] petitioner became [the] respondent's employee by reason of her dependence upon him for appointments made; by his supply of the bulk of the customers; by her utilization of his facilities on those days and those hours only when he chose to keep his salon open; by her lack of freedom to select her customers or the times when she would perform her ministrations; by her activity in selling his cosmetics at a commission; by her performance with his knowledge of incidental, though not required, services for him; by the use of his charge slips in billing customers to whom she gave facials; by his receipt and disbursement of payments for facials; by his control of the common phone; by her lack of any independent phone; by his not even giving her a key to the premises; by his dominance of the outside signs indicating the entire operation within was his alone; by his ability to terminate the relationship at will, as an employer might fire an employee at any time; and by the intertwining of her work with his in the operation of his business. [Ibid.]
The facts here are remarkably similar. Here, petitioner depended on respondent for making the resident's appointments; respondent supplied all her customers. Petitioner was not free to select her customers and had little control over the timing of her work. Although petitioner provided some supplies, respondent provided all of the essential hardware to run the salon. Petitioner's compensation was also based on a percentage of the fees paid by the customers. Finally, as Medina testified, respondent maintained the power to terminate petitioner at will. In this context, decorating the salon for the holidays can be viewed as performing an incidental, though not required service for the employer.
Our standard of review requires us to uphold the decision of a court of compensation if the factual findings are supported by reasonable and sufficient credible evidence in the record, considering the proofs as a whole, and giving due regard to the judge of compensation's assessment of a witness's credibility. Lindquist v. City of Jersey City Fire Dep't, 175 N.J. 244, 262 (2003). We thus defer to the factual findings and legal determinations made by the judge of compensation unless they are "manifestly unsupported by or inconsistent with competent relevant and reasonably credible evidence as to offend the interests of justice." Ibid. (quoting Perez v. Monmouth Cable Vision, 278 N.J. Super. 275, 282 (App. Div. 1994) certif. denied, 140 N.J. 277 (1995)).
Here, the record supports the judge of compensation's findings. The relevant legal principles support the judge of compensation's determination that petitioner was respondent's employee within the meaning of N.J.S.A. 34:15-36, and therefore entitled to workers' compensation benefits for injuries sustained in this work-related accident.